Operating Results

In 2020, the generating assets of Unipro generated 41,746 mln kWh of electric power. In 2019, as compared with the actual figures, production of electric power decreased by 4,687 mln kWh (10.1%).

The decrease in generation was primarily caused by:

• reduced demand for electric power in the context of COVID-19 and the OPEC+ Agreement;
• high feed of hydro power plants in both pricing zones;
• unusually warm weather in Q1 2020

The total volume of heat power output from headers of the Unipro PJSC branches was 1,870 thousand Gcal in the reporting period.

In comparison with the actual figures in 2019, the total volume of heat power output reduced by 183 thousand Gcal (8.9%). The decrease in heat supply is determined by the increase in the average outdoor temperature during the heating period. That fact was observed in all regions of the location of the Company’s branches. The highest decrease in the heat output took place at Surgutskaya GRES-2 (by 104 thousand Gcal or 11.4%).

Unipro PJSC power plants use gas, coal, and fuel oil as the process fuel. Natural gas is the primary fuel in the Company’s fuel mix, i.e. about 87.7% of the total fuel consumption in 2020.

The major gas consumer is the mono-fuel Surgutskaya GRES-2.

The Berezovskaya GRES uses lignite as primary fuel. Fuel oil is used at power units for start-up operations only. Coal is supplied to the power plant by the ground conveyor from Berezovsky-1 coal pit located 14 km away from the branch. Coal consumption by Berezovskaya GRES was 2,779.9 thousand tonnes in 2020.

Shaturskaya GRES, Smolenskaya GRES, and Yaivinskaya GRES can use various types of fuel for technological purposes. However, taking into account the prices over the last years, gas is the primary fuel for these branches. In 2020, its share in the fuel mix of Smolenskaya GRES was 99.9%, Shaturskaya GRES – 99.6% and Yaivinskaya GRES – 99.9%.

Following the results of 2020, Unipro PJSC spent a total of 9.2 bln cub m of gas, 2.8 mln tonnes of coal and 27.6 thousand tonnes of fuel oil for process purposes. The cost of fuel consumed by the Company’s power plants for the production of electric power and heat power in 2020 was about RUB 32.5 bln (net of VAT).

The key fuel supplier to the power plants of Unipro PJSC in 2020 was the independent gas producer NOVATEK PJSC. Its share in the total fuel cost procured for the Company’s generating facilities was about 76.6%.

In addition, Unipro PJSC procured gas from Rosneft Oil Company PJSC, Surgutneftegas PJSC and LUKOIL-Perm LLC in 2020.

The key coal supplier of the Company was SUEK JSC, which supplied lignite to the Berezovskaya GRES. In 2020, its share in the total fuel cost procured for Unipro PJSC power plants reached about 5.6%.

In 2020, the main suppliers of fuel oil for the Company were Sibprom LLC and Rosneft Oil Company PJSC.

Timely and quality repairs and maintenance of the generating equipment at the power plant ensure its reliable and safe operations and extend its service life. Therefore, Unipro focuses on improving the quality of repairs, enhancing equipment reliability and reducing incidence rates.

Unipro PJSC implements a 6-year repair cycle for all power units in strict compliance with the requirements of the Rules for Maintenance and Repair of Power Facilities approved by order of the Ministry of Energy of Russia No. 1013 dated 25 October 2017.

The strategy of the Company’s repairs is based on the use of a combined approach to arranging for and carrying out its repairs. The priority and the basis are the scheduled preventive repair using risk-oriented management methods by results of assessing the actual technical condition of the property, plant and equipment and assessing the financial risks related to an emergency shutdown of the equipment. When scheduling the repair periods and duration, the Company factors in the technical condition of the equipment, the need to perform mandatory activities required under the law, including industrial and environmental safety activities, the findings of the examination of failures and incidents over the past periods are taken into account as well.

The approach of Unipro to planning makes it possible to optimise shutdowns of power units to perform repairs and carry out works to extend the life of technical devices; to perform repairs of equipment affecting load bearing, and also exposed to the greatest wear during operation. A total of 2,600 repair employees are involved in the Company’s repairs, and the annual repair programme is 1,200 days. The process of entering into contracts with a term of performance of three years had a positive effect. Therefore, in 2020, we continued to enter into contracts with a term of performance of 2 to 3 years, in the past period, 24 purchases were made, the effect of savings due to the entry into 3-year contracts may be estimated at RUB 25 to 56 mln. (8-18 mln in the average annual terms) or 3.5-7.5%.

The advantages of multi-year contracts are:

• reduction of the time for procurement procedures, which involve specialists from both the production and procurement departments;
• getting additional economy of scale (additional discounts due to enhancement of the scope);
• fixing the rates for a long-term period (minimization of the inflation impact and improving the planning accuracy);
• guaranteed presence of high-skilled contractors for performance of works;
• labour saving;
• the contractor’s opportunity to establish physical infrastructure at the customer’s site which in turn reduces the time for manufacture and supply of the required equipment and materials.

The schedule of repairs of Unipro PJSC branches is based on preliminary surveys of the technical state of production facilities, applicable regulations, and long-term experience in operating the equipment. The repair programme is created in an automated mode in the maintenance and repair module MRO UACS FEA Microsoft Dynamics taking into account the analysis of the full range of identified defects and the need to eliminate the root causes of their occurrence.

In accordance with the annual schedule of repairs, power units with a total capacity of 11,235.1 MW were repaired in 2020, including overhaul — 1,370.0 MW, intermediate maintenance — 2,220.2 MW, and current repairs — 6,844.9 MW. Reconstruction works were completed at power unit No. 3 of Berezovskaya GRES that were carried out after the accident in 2016, 800 MW. At the end of 2020, the work began under the steam-water-oxygen cleaning and passivation (SWOC&P) programme of P-67 boiler of power unit No. 3. The work was carried out from 16 December 2020 to 09 January 2021, 11 boiler starts on fuel oil were carried out.

The total amount of repair works costs at Unipro PJSC power plants amounted to RUB 5.5 bln in 2020, including the current production — RUB 3.1 bln, and new production — RUB 2.4 bln. All the scheduled repairs have been made in full.

31% of repairs was done using the Unipro own resources, and 69% through contractors. The contractors were selected through tenders in order to ensure that contracted terms and conditions were most favourable for the Company.

In 2020, Unipro PJSC continued to actively develop the Operational Excellence (OE) System. In 2018—2019, in order to reduce costs and to increase efficiency, tools were developed and customized to the company’s conditions for improving technical streams (increasing the staff performance during the repairs, optimizing equipment repair strategies, increasing fuel efficiency) and a basis was formed for embedding the OE System into the Company’s culture.

To fix the achieved results and to ensure the sustainable development, the OE strategy was updated in 2020. In accordance with that strategy, the development of the technical streams of the OE System continues, and it focuses additionally on embedding the OE principles in the Company’s DNA, developing a culture of continuous improvement and OE competencies of the staff.

Creating a technical model

2018-2019

• Development and customization of the OE tools for improvements in the operation and repair
• Implementation of pilot projects
• Active involvement of Company managers in all improvement projects
• Forming the basis for embedding the OE System in the Company’s culture

Embedding the OE in the Company’s DNA

2020-2021

• Creating the in-house instructors institution
• Large-scale employee training to develop the OE competencies
• Development of Involving Leadership — the Role Model of Managers Behaviour
• Launching the OE diagnostics system
• Increasing the OE coverage

Consistent improvement in financial performance

The three-year strategy for the OE development implies the simultaneous transformation of three focal areas: the technical model, the management system and the continuous improvement culture.

OE strategic objective

Embedding the OE in the Company’s DNA

Priority technical streams

Improving the performance
of maintenance and repair

Cost reduction

The technical model is developed by increasing the efficiency of asset and resource management. Here, the key tools are optimizing the repair strategies, making the use of in-house repair staff more efficient and improving the fuel efficiency.

As part of improving the management system, the regular diagnostics has been arranged for and OE committees have been formed which enables the Heads of functional areas and branches to share their best practices, the status of the OE plans implementation and the economic result achieved.

Fostering the continuous improvement culture ensures that important results are achieved and the efficiency increases continuously over the long term through development and involvement of all staff in the continuous improvement process. For the development of this area, the corporate institute of in-house instructors was formed from among the OE employees and the Heads of functional areas of the Headquarters and the branches. The primary task of the expert in-house instructor is to transfer knowledge of the OE tools through personal example and professional experience. The forming of such instructor team helps to increase the involvement of functional areas in the OE process, strengthens cooperation and ensures the achievement of goals and the implementation of improvement programmes.

With the direct involvement of the in-house instructors and the staff training and development department, the Efficiency in Genes programme was formed that is aimed at training and practicing practical OE skills. The programme objective is to embed the OE System tools into the Company’s DNA. The training consists of a set of modules called DNA Genes. Since mid-2020, a large-scale training for the Unipro employees has been launched under this programme.

In addition, mechanisms are being developed to incentify the staff to improve the efficiency and an efficiency fund has been formed to accelerate the implementation of optimization initiatives and to encourage their authors.

Further steps in the implementation of the OE development strategy are the improvement of the medium-term goal-setting system in terms of optimization activities and 100% coverage of the branches and the functional areas with the OE tools and improvement projects.

This approach will allow achieving consistently high financial performance due to the optimization activities by combining the efforts of all employees of the Company in order to achieve the target.